Verizon has brought back its unlimited data plan. That’s great if you’re a Verizon customer. But it is terrible news for its investors.
Verizon (VZ) Shares fell nearly 1.5% in early trading Monday. It is now down about 10% year to date, making it the Dow’s worst performer of 2017.
Verizon’s move is a clear sign that the company has to do everything it can to remain competitive with its wireless rivals. AT&T (t), pique (Yes) and T Mobile (TMUS).
“In recent months, both T-Mobile and Sprint have had some success in acquiring additional Verizon share by virtue of their unlimited offerings,” Morgan Stanley analysts wrote in a report Monday morning.
That may explain why shares of T-Mobile and Sprint, which is now controlled by Japanese tech conglomerate SoftBank, are up this year while Verizon is down. T-Mobile and Sprint have also been permanently linked as potential merger partners.
But the new telecom price war is not the only problem for Verizon.
AT&T recently acquired satellite streaming provider DirecTV, a move that makes Ma Bell more competitive against Verizon in the battle to control people’s living rooms. Verizon offers its own FiOS broadband TV service.
Related: Verizon brings back unlimited data plans
And AT&T is also making a much bigger bet on content, with plans to buy CNN’s parent company. TimeWarner (TWX). Verizon already owns AOL and is looking to buy Yahoo’s core assets to bolster its own digital content offering.
But yahoo (YHOO) The deal could fall apart in the wake of revelations of massive data breaches at Yahoo in recent years.
Yahoo recently said it expects the deal with Verizon to close in the second quarter of this year. It was originally supposed to be completed in the first quarter.
However, in its latest earnings report, Verizon simply said it “continues to work with Yahoo to evaluate the impact of the data breaches,” although it did not expect the deal to close anytime soon.
Verizon has a lot on its plate, which could make investors nervous. In addition to the deal with Yahoo, the company is also in the process of purchasing XO Communications’ fiber optic network. And it is selling its data center business to Equinix (EQIX).
There have also been rumors in recent weeks that Verizon might even consider purchasing a cable provider. Charter communications (CHTR).
That may be more than Verizon can realistically handle right now. But nothing can be off the table for Verizon given how competitive the wireless world is these days.
Anything that could give Verizon an advantage over AT&T, Sprint and T-Mobile could be possible.
Related: Charter Stock Popped on Report of Possible Verizon Acquisition
Still, it’s worth noting that AT&T stock is also down this year, about 5%. And Verizon and A&T have something in common that Sprint and T-Mobile lack: Verizon and AT&T pay huge dividends.
Companies that have big dividend yields haven’t fared as well since Donald Trump was elected. Investors are betting on a sizable stimulus package from him and the Republican Congress, which could be driven in part by debt.
That has caused bond yields to rise, and that makes stocks of big dividend payers like Verizon much less attractive.
The Federal Reserve is also expected to raise interest rates several times this year. That could push bond yields even higher.
That’s why Verizon faces many major challenges that could hurt its stock this year.
That’s why Verizon, nicknamed Big Red because of the crimson hue of its logo, may see its stock in the red for the foreseeable future.
CNNMoney (New York) First published February 13, 2017: 11:27 am ET
